Analyst: HOS leading to revenue loss for carriers

Truck rates have increased by at least 1.6 percent since the Federal Motor Carrier Safety Administration’s new hours of service rules went into effect July 1, but the rule has caused an industry-wide productivity loss of between 3 percent and 5 percent, according to DAT’s Mark Montague.
“That means the carriers will be ‘eating’ about half of the revenue loss, at least until they can negotiate new contract rates for 2014,” Montague, a pricing analyst for DAT, wrote in a blog post. “Shippers typically conduct annual procurement early in Q1, and new rates go into effect in early Q2.
On intermodal lanes, Montague wrote that the price increases seen since July 1 are even smaller, squeezing trucking companies even more. He measured a price decline of 1.2 percent on lanes where companies compete with intermodal providers. He noted that in the fourth quarter, rail intermodal rates have shot up by 9.9 percent after a rate hike of 4 percent in the third quarter. Montague wrote that rail rates are expected to close the year up 4.8 percent.
“Based on these findings, HOS may not bode well for the carriers’ long-term profitability,” he wrote. “In addition to the financial impact of the rules change, there are concerns about its impact on safety, which was the intent of the rule in the first place.”